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Stainless steel output still on target for another record year
July 2004
Results from the first few months of this year indicate that stainless steel production in 2004 will reach another peak level. MEPS International maintains their previous forecast for Western World output at 21.2 million tonnes. This represents a year on year increase of 4.4 percent. Global supply, including the former command economies of China and Russia, is expected to reach 22.6 million tonnes - up by 6.1 percent compared to 2003.
The main driver for this higher demand continues to be growing consumption in China. This has given a boost to many producers in the industrialised and emerging countries - particularly in Asia but also in many other regions, including Europe, Africa and South America.
EU production is likely to expand by just one percent in 2004 after a poor start. First quarter stainless melting was down by more than 2 percent, mainly as a result of a strike at Acerinox - the principal Spanish manufacturer. A slight pick up is anticipated over the next three quarters.
A very modest improvement in output is anticipated in Japan this year. The first quarter turned out to be at a similar figure to the same period in 2003. Most steelmakers are finding it difficult to compete against lower cost Asian producers. However, they are now targeting customers transferring away from the 300 series into the 200 and 400 grades.
US producers are also encountering offshore competition. This threat leads MEPS to predict little or no improvement in stainless melting this year.
South Korean steelmaking continues to roar ahead after Posco's substantial investment in stainless manufacturing. The outlet for most of the extra production is hot band into China to their subsidiary outlets and local re-rollers. MEPS forecasts stainless melting at 2.25 million tonnes in 2004 - up by a massive 22 percent on the previous year's figure.
Taiwanese output increased during the first trimester. This should provide the platform for a 4 percent rise for the full year - mainly based on exports to China.
MEPS envisages further growth in supply from the other countries, including Brazil, South Africa and India. However, this year's improvement is likely to be less dramatic than in 2003. Finally, MEPS forecasts a significant gain in production from new investments in China.
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